MSP’s help solve the “Economies of scale” dilemma

All companies, whether they are large or small, require many of the same things to remain competitive. The challenge is, “economies of scale,” places the smaller firms at a disadvantage; this is especially true when it comes to IT and security. Small firms need, but generally cannot afford, a completely robust 24/7 monitored redundant infrastructure. As a result, you are vulnerable to IT failures that could shut down your business.

What are economies of scale? As you begin producing more units of a product or service, the costs of the input needed to create that product or service drop. It is why big firms offer each unit at a lower rate. Small firms face particular problems with this issue when it comes to technology.

Consider, if you need 24/7 support, you would need to have a minimum of three full-time employees, with all the costs of salaries, benefits and training. With an IT person available during all of those hours, the three full-time employees could make those labour costs unaffordable, while a lot of the time, the employees would have little or nothing to do.

If something happens without onsite support, you lose customers and could fail. However, if the firms grow to a few 100 employees, the full-time, in-house labour cost per employee might drop to a manageable and sustainable level.

Is there a way around this? Aside from just crossing your fingers and hope nothing breaks before you have enough capital to invest in a more robust design? Yes, and it is called the cloud. The cloud offers small businesses the opportunity to outsource their IT infrastructure.

Moving your IT needs to a fully monitored offsite location, sharing overhead and hardware costs with thousands of other users, the ability to benefit from the economies of scale that would have been impossible before the advent of the cloud.

The use of managed service providers is also an excellent way to maintain 24/7 support and take advantage of outside expertise to build a technology infrastructure the will support your business in the future. As with the cloud, you use as much of the MSPs support as you need without having to spend the money for FT in-house support you don’t necessarily need.